MoD scraps $500 million Israeli missile deal, wants DRDO to make in India

Asking the Defence Research and Development Organisation (DRDO) to indigenously develop and produce a Man-Portable Anti-Tank Guided Missile (MPATGM) for the Army, the Ministry of Defence (MoD) has decided to cancel the $500 million deal for Spike ATGM with Israel. The deal, seen as another proof of growing Indo-Israel defence cooperation, was expected to be signed after price negotiations with Rafael Advanced Defence Systems of Israel were completed last year.

In anticipation of this deal, Rafael had entered into a joint venture with Kalyani group for missile production in India. The missile sub-systems manufacturing facility, based near Hyderabad, was inaugurated in August.

Ministry sources told The Indian Express that the decision to cancel the deal was based on the consideration that importing a foreign ATGM at this stage would adversely impact the programme for indigenous development of the weapon system by DRDO. Earlier, India had also rejected an offer from US-based Raytheon-Lockheed Martin for Javelin ATGM in favour of the Israeli weapon system.

“DRDO has successfully produced the Nag and Anamika ATGMs. It is confident about providing the Army with an MPATGM of 3rd generation missile technology, at par with Spike, within three to four years. It won’t also need any transfer of technology,” sources said.

The decision to retract the Request for Proposal (RFP), however, will be a setback to the modernisation programme of the Army. In letters to the MoD, the Army headquarters had highlighted “the operational urgency of the equipment”, arguing that the Spike “gives a major capability impetus to troops deployed on the Line of Control, especially in the current operational scenario”.

Spike MR missile is a 3rd generation, fire and forget, top attack, ATGM with a range of 2.5 km, which can operate both during the day and night. The Army is currently using 2nd generation ATGMs — Konkurs and Milan 2T — which do not have night-fighting capabilities. Moreover, the Army currently has a shortage of around 68,000 missiles, with no missiles held as War Wastage Reserves against a government stipulation to build up stocks to last for at least 10 days of intense fighting.

In 2009, the MoD accepted the requirement of buying 321 ATGM launchers and 8,356 missiles, with 30 per cent offsets and a transfer of technology clause. An option of approaching the US for buying Javelin ATGM was also explored, but the US government was not amenable to transfer of technology. Only Rafael of Israel responded, and Spike missiles underwent trials in 2011-12. The ministry accepted the trial evaluation in 2013 and gave clearance for procuring from a single vendor. The US government later tried to offer the Javelin ATGM with transfer of technology but India chose to go ahead with the Israeli system.

Ministry sources said that trials highlighted a problem with one of the two homing devices in the launcher which led to constitution of a study group. The study group presented its report in August 2014, and the ministry agreed in October 2014 to procure the missiles from Rafael.

Price negotiations between Rafael and the MoD started in March 2015. After the prices were finalised in June 2016, then Defence Minister Manohar Parrikar constituted an experts committee to review the evaluation report and explore the possibility of an indigenous missile system. There was divergence in the views of the DRDO representatives and Army representatives in the experts committee over the case. The matter was eventually resolved earlier this month with Army headquarters agreeing to retract the RFP for ATGM launchers and missiles.